With the end of 2015 approaching, NAHB’s Eye on Housing is reviewing the posts that attracted the most readers over the last year. In November, we published our most recently quarterly look at typical new home size.
The typical size of newly built single-family homes was effectively unchanged from the second to third quarter of 2015, posting a small quarterly decline. The current data is consistent with the general trend of flat growth for the size of typical newly-built homes, a pattern that took hold during 2014. As first-time buyers return to the market, typical home size is expected to trend somewhat lower.
According to third quarter 2015 data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis, median single-family square floor area fell from 2,478 in the second quarter to 2,445 square feet. Average (mean) square footage for new single-family homes fell from 2,704 to 2,653 for the third quarter.
On a less volatile one-year moving average, the recent trend of leveling home size can be see on the graph above, although current sizes remain elevated. Since cycle lows and on a one-year moving average basis, the average size of new single-family homes has increased 13% to 2,693 square feet, while the median size has increased 17% to 2,472 square feet.
The post-recession increase in single-family home size is consistent with the historical pattern coming out of recessions. Typical new home size falls prior to and during a recession as some homebuyers cut back, and then sizes rise as high-end homebuyers, who face fewer credit constraints, return to the housing market in relatively greater proportions. This pattern has been exacerbated in the last two years due to market weakness among first-time homebuyers.
In contrast to single-family patterns, new multifamily apartment size is down compared to the pre-recession period. This is due to the weak for-sale multifamily market and strength for rental demand.